1. DAIKIN February 18 th, 2011 Daikin US How to Evaluate Refrigerants? >Global Warming Impact >Energy efficiency & Peak Load >Flammability & Toxicity >Affordability - “Quick Gain”

2. November 13 th, 2010 Daikin Industries, Ltd. 2 LCCP comparison (3.5 kW Room A/C) based on cooling and heating How to Evaluate Refrigerants? – Global Warming Impact - (3) Emissions during refrigerant production(2) Direct emissions(1) Indirect emissions Total Emissions = （ Precondition for Calculation ） - Recovery rate = 30%, Leakage rate= 5%/yr, Source of Emissions during refrigerant production is JRAIA 2004 Kobe Symposium GWP=IPCC 4th (the EU F gas regulation, the GWP of the IPCC1 apply where R410A is 1975) *1 Taking low pressure loss into consideration, narrower heat exchanger was used to reduce charge volume. *2 To improve efficiency, HX size was increased : Indoor HX x 1,1 + Path x 2, Outdoor HX x 1.2, and connecting pipe increased from 3/8=> 5/8 *3 To meet IEC requirements, charge volume was reduced: Indoor HX x 0.8, Outdoor HX x 0.5, narrower piping was used. *4 To Improve efficiency: Outdoor unit HX was increased x 1.1 3.5kW Room A/C in Europe – EuP Average Condition (EU Average = 0.43Kg/kWh) (Kg = Charge volume) R410A (1.2kg) R744 (0.84Kg) (*4) R290 (0.37kg) (*3) R32 (0.84kg) (*1) HFO1234yf (1.32 kg) (*2) R22 (1.14kg) (Kg ･ CO2) (Kg ･ CO2) (1) 14000(2) 1 (3) 0.5 (1) 15000(2) 1 (3) 0 (1) 12000(3) 390(2) 1800 (1) 12000(2) 2100(3) 23 (1) 13000 (2) 4(3) 23 (1) 12000(3) 12(2) 480 Disregarding IEC, the charge volume is 0.58Kg, and Indirect impact could be reduced by 16% 070009000110001300015000

3. November 13 th, 2010 Daikin Industries, Ltd. 3 How to Evaluate Refrigerants? – Global Warming Impact - GWPCharge ratio %Modified GWP The direct global warming effect of R32 is only 26% of R22, and 24% of R410 Could be much lower by using micro channel heat exchanger GWP values are based on IPCC 4th report. (Note : for the EU F gas regulation, the GWP values of the IPCC1 apply where R410A is 1975) 75% reduction

4. November 13 th, 2010 Daikin Industries, Ltd. 4 How to Evaluate Refrigerants? – Energy-efficiencies - R410A (1.2kg) CO2 (0.84Kg) *4 Propane (0.37kg) *3 R32 (0.84kg) *1 HFO1234yf (1.32 kg) *2 SEER Comparison (cooling mode) HPs （ Reversible ） - 3.5kW-Room AC in Europe Consideration: A big difference exists in the peak power under cooling condition. HFO and CO2 will cause peak power problems in large cities. Power ratio Efficiency ratio Consideration: In terms of SEER, CO2 is the worst, and the rest of candidates are equivalent to R410A. R22 (1.14kg) 0.70.80.91.01.10.71.01.3 If disregard IEC, the charge volume is 0.58kg, and SEER could be same as R22 (Precondition for Calculation) Note: HX= Heat Exchanger *1 Taking low pressure loss into consideration, used narrower heat exchanger to reduce charge volume. *2 To improve efficiency, changed sizes: Indoor HX x 1,1 + Path x 2, Outdoor HX x 1.2, and connecting pipe => 5/8 *3 To meet IEC requirements, charge volume was reduced: Indoor HX x 0.8, Outdoor HX x 0.5, and used narrower piping. *4 To Improve efficiency: Outdoor unit HX x 1.1 Peak power comparison (R410A ratio) under cooling condition Outside 35°C, room 27°CDB/19° CWB

5. November 13 th, 2010 Daikin Industries, Ltd. 5 Consideration on the use of 2L refrigerants classified by ASHRAE 34 and ISO 817 Class 1 (No flame propagation) (No flame propagation) Class 2L (Lower flammable with low burning velocity) Class 2 (Lower flammable with high burning velocity) (Lower flammable with high burning velocity) Class 3 (Higher flammability) (Higher flammability) CO2(R744 ) R410A R22 HFO 1234yf R32 Ammonia (Toxic) R152aPropane (R290) 1. Flammability of Class 2L is similar to ammonia. Consideration is ongoing to clarify the safety requirements to use 2L refrigerants 2. Commercial refrigeration and MAC (wrong use) which employed R290 caused fire accidents in the field 3. ASHRAE 34 recently reclassified R32 & HFO 1234yf down to new Class 2L (Lower flammability, low burning velocity) Beer cooler incident in Australia 10/19/95, CA: charging while engine was still hot 8/18/96, MS: low pressure hose from evaporator blew off 9/27/96, AR: torch used on truck AC unit after venting refrigerant Source: US-EPA in Bogota 2008 Fire accident ｓ in case of HC use for cooking & heaters : ave.68/yr, death: ave.1.3/yr (01-06),:Source METI Japan Propane explosion in a New Zealand supermarket. Source: EFCTC newsletter ASHRAE 34: Class 1 = Non flammable, Class 2L Mildly flammable Class 2= Flammable, Class 3 = Highly Flammable How to Evaluate Refrigerants – Safety: Flammability -

6. November 13 th, 2010 Daikin Industries, Ltd. 6 While risk of R290 (propane) can be addressed with several measures (eg forced fan operation to lower concentration below LFL), repair and disposal risks remain considerably high. 0 10 20 30 40 50 60 TransportInstallationUseRepairDisposal Estimated Incidents/year in Japan with R290 room air conditioners, after Measures Optimistic Pessimistic Source : Risk assessment work on HC refrigerant carried out by JRAIA Non Fluorocarbon Refrigerant WG in 1999-2000. Reason : -Human errors during repair & disposal, which is beyond the control of manufacturers - During repair & disposal there is no power supply for the unit, so measures such as forced fan operation do not work.

7. November 13 th, 2010 Daikin Industries, Ltd. 7 How to Evaluate Refrigerants – Cost up Factors - Important (ex.230g) Special joint Sealing etc. Necessary Necessary Unnecessary Unnecessary Unnecessary Unnecessary Necessary Special joint Unnecessary Necessary Special joint Unnecessary. Unnecessary Cost for safety Charge reduction Joint Electronic parts Leak detector Ventilation Modified facility Qualification Qualified person Two-stage comp. High-pressure etc. Cheap CO2(R744) Larger comp. Larger pipe etc. Near as R410A Same as R410A Modification required Same as R22 Cost for performance Compressor, EX, etc. Modified facility Modification Expensive HFO1234yf Cheap Refrigerant price Modified facility Modification Special facility Qualification Qualified person Qualification Cost for handling Manufacture Supply chain Installation Service Disposal R32Propane (R290) The Example of Room A/C Component which increases cost Consideration: CO2 requires significant cost for performance improvement. Consideration: Propane requires additional cost when taking safety measures in application and handling. Required in Japan

8. November 13 th, 2010 Daikin Industries, Ltd. 8 Difference in Situations HCFC to non- ODS HVAC Market Expectation HFC Emissions in 2050 (BAU) *1 Containment Measures Developing nations Not startedRapid76%Not in place Developed nations CompletedSaturated24% Partially in place (EU, Japan) *1: The figures are by Öko Recherche Early Implementation in Developing Nations is Most Important Change over to lower environmental impact refrigerants ASAP. Establish containment measures for further mitigating the impact. Early Implementation in Developing Nations is Most Important Change over to lower environmental impact refrigerants ASAP. Establish containment measures for further mitigating the impact. “Quick Gain” To significantly reduce future global warming impact “Quick Gain” To significantly reduce future global warming impact “NOW” Use Technology Available “NOW” How to Evaluate Refrigerants – Early Implementation -

9. November 13 th, 2010 Daikin Industries, Ltd. 9 Refrigerant application map for ACs and HPs (Daikin’s assessment for the time being) ? ? CO2 R32 CO2 、 NH3 R32 HFO Room split Commercial split Water heater Refrigeration Mobile Chiller HFO Daikin does not produce Today’s Focus

10. DAIKIN February 18 th, 2011 Daikin US Conclusion

11. November 13 th, 2010 Daikin Industries, Ltd. 11 Conclusion 2. A2L Class refrigerants for all capacity ranges can be used with only minor modifications To address climate change issues, quick actions are required. We are confident that R32 technology is one of the solutions that can quickly reduce greenhouse gas emissions from refrigerants, in both developed and developing countries. 1. Evaluate not only GWP but also the total GHG emissions (LCCP) 4. Earn “Quick Gain” for lowering future global warming impact. 3. Peak load should be considered when choosing candidates. In case of R32, higher efficiency and less refrigerant charge will lead to lower greenhouse gas emissions. Additional leakage prevention measures will contribute to emission reduction further, as is the case of all refrigerants. Not only seasonal energy efficiency but also efficiency in extreme temperature conditions (peak load) should be taken into consideration. It is important for the power supply infrastructure.

12. DAIKIN February 18 th, 2011 Daikin US Thank you for your kind attention